Used Car Buying Guide: How to Choose a Used Car (Part 2)

 

This is part 2 of the Used Car Buyer’s Guide. In this part, you will learn:

• How to choose a reliable used car

• What the used car maintenance costs are

• If buying from a dealer is better than buying from a private seller

• How to talk to used car sellers and what questions to ask

 

How to choose a reliable used car

In my humble opinion, one of the best things you can do to improve the odds of trouble-free car ownership is to avoid the latest technological innovations.

Surprised?

Let me explain then.

The automotive industry is a fiercely competitive market, with new products and features being great opportunities to grab a bigger market share. Obviously, car manufacturers try to make their cars reliable, but I’m afraid it’s not one of their main objectives.

The sad truth is that new cars are usually rushed to the market (as soon as the manufacturers can make them last past the warranty period). In fact, this applies to many products, not just cars.

Reliability comes from repetition, not innovation.

As an engineer, I can tell you that newly released products have a lot more problems than something that has already been on the market for a few years. It takes a while for the manufacturers to sort out design flaws and quality issues. This is the case whenever a new car, a new engine or a new transmission is released.

Here are some examples from the automotive world:

• The first time aluminium alloy cylinder heads were used in the 1980s = head gasket leaks

• Introduction of water-based paint in the 1990s = corrosion

• The first time piezo-electric fuel injectors were used in the 2000s= widespread injector recalls

• First direct injection petrol engines = carbon build-up on the intake valves

As a rule of thumb, it takes about 3 years for the manufacturers to sort out the initial problems. If you don’t want to be a manufacturer’s guinea pig, choose proven used car models that have been on the market for 3 years or more. The odds are that they will have fewer issues and be more reliable.

This isn’t that important when buying a brand new vehicle that comes with a manufacturer’s warranty, but it becomes increasingly important as the car ages.

One of the biggest drawbacks of driving used cars is that the most complex and most advanced cars are the most expensive to maintain.

The simpler the car, the better.

 

Petrol vs Diesel

Modern diesel engines are far from simple. From a financial point of view, the decision whether to buy a diesel car depends largely on how many miles you are going to cover every year.

If you’re planning to do more than 12,000 miles per year, then a diesel car makes sense. Below 12,000 miles per year, the fuel savings may not offset the cost of maintenance in a meaningful way.

Owning a used diesel car means dealing with the usual diesel malarky: EGR valves, diesel particulate filters, dual-mass flywheels, expensive fuel injectors and swirl flaps.

For more details about the maintenance costs of modern diesel cars, follow this link.

 

Avoid known problems

Before deciding on any particular car model, you can look it up in the Car Directory. There, you will find descriptions of the typical problems you might have with that car.

It’s important to choose used car models carefully. Let me give you an example.

Below is a list of potential problems you may have with two Audi A3 (8P) models. The difference between them is the engine and the transmission.

 

Audi A3 1.8 TFSI with the S-Tronic transmission

• High oil consumption (cost to fix: £3000-4000 at the dealership)

• Timing chain tensioner failure (cost to fix: £300-400 at the dealership, potentially a lot more in the worst case)

• Carbon-build-up on the intake valves (cost to fix: £100-400)

• DQ200 dual-clutch transmission – mechatronics unit failure (cost to fix: £2000-3000 at the dealership)

• DQ200 dual-clutch transmission – worn clutch (cost to fix: approx. £1000 at the dealership)

• Dual-mass flywheel failure (cost to fix: approximately £900 at the dealership)

Total (average): £8,500

 

Audi A3 1.6L with a manual transmission

• Timing belt replacement needed (cost to fix: £500-700 at the dealership)

• Worn clutch (cost to fix: approximately £800 at the dealership)

Total (average): £1400

 

As you can see, the difference between engine/transmission variants can be huge!

You would have to be extremely unlucky, or keep the car for a decade, to encounter all the problems above. However, you are likely to run into some of them.

I’ve quoted dealership prices to drive my point home. My point is that you have to consider the known problems with particular car models when choosing a used car to buy.

I should also mention that you could easily get 30% better prices outside of the dealership. Therefore, the second moral of the story is to avoid dealerships when possible, but that’s a topic for another time.

Please keep in mind that you don’t necessarily need to avoid all models that are known to have certain problems. Sometimes a bit of citrus flavour is acceptable, as long as the car is not quite a lemon.

What I mean by this is that you can consider problematic cars as well, as long you take some precautions to avoid known problems or simply accept a higher maintenance burden.

 

Here’s what you can do when dealing with cars that are known to have issues:

• Completely avoid cars with potential problems that are difficult to detect. If you can’t be certain that a particular car is free from a known defect, don’t buy it. For example, it’s usually not obvious if a 1.8 TFSI (EA888 Gen.2) engine from the example above consumes oil. That is unless it already consumes ridiculous amounts, which is when blue smoke appears.

• Also, avoid cars that may develop a fault that’s very expensive to fix. The 1.8 TFSI from the example above also fits this category (engine rebuild with new pistons and piston rings required).

• When inspecting a used car that you would like to buy, pay extra attention to the signs of typical problems. For example, if a diesel car has a dual-mass flywheel and there are no symptoms of it being worn, then you won’t have to worry about it for quite a while. Dual-mass flywheels don’t go bad overnight.

• Let’s say that you went to see a Vauxhall/Opel car that is fitted with the M32 transmission. You inspected the car and it was showing signs of worn out bearings in the gearbox. In such case, you could try to reduce the price of the car by £600, which is how much it usually costs to replace the bearings in the M32 gearbox. If the seller agreed, you could buy the car and the fix the problem yourself.

• When looking for used cars online, try to find those with known problems already fixed by the previous owners. I like this approach because you can often find cars with the major problems already sorted out.

 

Used car maintenance costs

The right way of buying a used car is not spending all your budget on the car itself. The car you are going to buy will almost always require some initial maintenance. Therefore, always put some money aside to sort out whatever needs sorting out at the beginning of the car ownership.

Here are some typical maintenance items that may need to be taken care of in a used car that you buy:

• Routine maintenance items: engine oil, air filter, brake fluid and cabin filter

• Timing belt

• Tyres

• Brakes: disc and brake pads

• Oil leaks (common in older cars)

• Suspension parts

If you buy a car that has been maintained well, most of the things above won’t need replacing. This is why a pre-purchase inspection is so important.

Don’t worry though, most things can be checked before you buy the car, and I will show you how to do it in part 3 of this guide.

If you’d like to read more about routine car maintenance, then follow this link.

If you don’t know what a timing belt is, please follow this link (it’s important, seriously).

 

Used car maintenance costs by brand

Modern cars are actually very similar. Most car manufacturers use the same design solutions and share the same suppliers. The odds are that if you drive a diesel car, the fuel injectors were made by Bosch, Siemens or Delphi, regardless if it’s a BMW or a Hyundai.

With cars being so similar, the maintenance costs also quite similar. There is a pattern, though.

We can divide the popular car makes into three groups:

• Above average maintenance costs: Bentley, Audi, Mercedes-Benz, Land Rover, BMW, Mini, Volvo, Porsche

• Below average maintenance costs: Toyota, Honda, Mitsubishi, Mazda

• Average maintenance costs – everything else: Ford, Vauxhall, Opel, Fiat, Volkswagen, Skoda, Chrysler, Kia, Nissan etc.

Luxury brands are the most expensive to maintain. There are two reasons for this. High complexity is one of the reasons. Luxury cars have more new technologies, more features and they are geared towards high performance.

Performance > Reliability

The second reason why some brands are more expensive to maintain than others is simply due to the higher cost of replacement parts. Spare parts for expensive cars are also expensive.

To clarify, I’m not saying that luxury cars are unreliable. It’s just that machines fail and complex machines fail more often (and then they cost more to fix).

 

Car brand reliability?

I haven’t mentioned brand reliability yet because it’s a very broad term. You can’t really say that one brand is consistently more reliable than another without taking into account the type of cars those companies produce. Even then, the differences between individual car models can be massive.

I think that the reliability of modern cars is highly correlated with their complexity and less with the brand of the car. It just happens that some companies make more complex cars.

Well, I will make an exception and say that Japanese manufacturers have a better reliability track record, generally speaking. Some of the least expensive cars to maintain are Japanese.

 

Unfortunately, Japanese automotive products also have their share of problems. Exploding Takata airbags is one of them.

Nothing is ever black and white, isn’t it?

My advice is not to worry too much about car brands when buying a used car. Better look at individual car models to find out if they are reliable.

While I will agree that Toyota cars are more reliable than Alfa Romeo cars in general, an Alfa Romeo can be more reliable than a Toyota when you choose the right model (yes, I’ve taken my medicine)!

 

Rare = expensive to maintain

Another important aspect of choosing a second-hand car is considering the availability of spare parts.

The more popular the car, the bigger the selection of aftermarket parts, which are often 1/2 or 1/3 the price of OEM parts while still being of decent quality. Even the OEM parts tend to be cheaper for popular cars (economy of scale).

The same goes for service costs. Garages tend to charge a premium price for working on complex and unfamiliar vehicles. For a car technician, working on a familiar car is both faster and easier, which is then reflected in the price of the service.

So, get a car that local garages are familiar with – you will save a lot of money in the long run (especially with older cars).

By the way, the Astra TwinTop from the photo at the beginning of this article is not much more expensive to maintain than the Astra H hatchback. That’s because both cars share 70% of the parts and the Astra H is a very common car in Europe.

 

Maintenance costs: how much exactly?

You are probably wondering what the exact figures are.

The average maintenance cost for a 10-year-old car is typically between £400 and £1200 per year.

Simple 4-cylinder cars with manual transmissions fall in the lower end of the spectrum, while luxury cars that are full of cutting-edge technology fall in the top end.

Keep in mind that it’s a very general estimation for quite old cars. Newer cars are obviously less expensive to maintain. Also, maintenance costs are not linear. You may have to spend a £1000 in one year and almost nothing the next year.

 

Used car mileage and age

The age and mileage of the car is an important factor when choosing a used vehicle to buy.

It is possible and not that uncommon to find 10-year-old cars that still look pretty good both inside and out. The problem is that underneath it’s still a 10-year-old car.

10 years is by no means the end of life for the vast majority of cars, but the odds are that such a car will need a lot more attention to keep everything in good working order.

Before we continue, let’s make an assumption that a typical car covers 10,000 miles per year. I think it’s a good middle ground.

If you’re interested in specific figures – British drivers typically do around 8000 miles per year, while American drivers do over 13000 miles.

Here’s my recommendation based on the mileage and age of the car:

 

Used cars: 0-5 years old, up to 50,000 miles

These cars can be as reliable as new ones. People that don’t know much about cars and don’t intend to do any DIY maintenance work should stick to cars within this range.

Cars that are up to 5 years old can look nearly as good as new ones. They will not be outdated in terms of safety and the features, while already being much cheaper than new vehicles. A 3-year-old car has lost 40-50% of its value, so it’s already a pretty good deal.

When buying a used car from this age range, try to buy one that had only one owner and a full service history. This is the ideal scenario.

Apart from being a great indicator that the car is well-maintained, the service history affects the value of the car significantly. The majority of people that buy these fairly new used cars care about having a full dealer service history. In fact, not having a full service history can reduce the value of the car by up to 20%.

This is important information because it gives you two options:

• Find a car with a full service history (the safer option of the two)

• Buying a car with an incomplete service history gives you an opportunity to negotiate a significant discount (not recommended unless you have some experience buying cars)

Don’t pay the full market price for a car with an incomplete service history because you may struggle to get your money back when you decide to sell the car in the future. One of the first questions asked by a potential seller will likely be about service history.

 

Used cars: 5-10 years old, up to 100,000 miles

Cars that fall into this range are a good choice for people trying to save money and wanting to drive a nice car at the same time.

It may take a bit longer to find a well-maintained car at this age, but there is plenty of them out there. These cars will obviously have more signs of wear, but with some patience, you can find cars that still drive and look almost as good as new.

Please be aware that these slightly older cars will need more attention than newer vehicles. I don’t recommend them for people with no understanding of how cars work and not willing to do at least the basic DIY maintenance work (light bulbs, air filters, spark plugs, replacing parts that are easy to access etc.).

The reason why I mention DIY is that you can save a lot of money by being able to fix simple problems.

For example, fixing sticking parcel shelf flaps in a Vauxhall Astra TwinTop (convertible) costs around £600 for both flaps at the dealership. However, you can also fix the problem with £30 and 40 minutes of your time.

 

Used cars: older than 10 years, above 100,000 miles

These older cars don’t depreciate much anymore, so the potential to save money is the highest. However, there is a ‘but’.

They require some technical knowledge and DIY skills to be cost-effective. Bigger, more expensive repairs are more likely to fall within this age/mileage range. For example, the clutch may wear out or the dual-mass flywheel may need replacing. Diesel cars may start developing problems with the emissions control equipment. Also, oil leaks become fairly common.

Keeping everything in good working order is likely to require some effort. If you can’t keep up, you may have to live with some problems. This is fine too, as long as the main components (engine, transmission, suspension, brakes) are in good working order.

If it doesn’t bother you, then you can ignore a broken cruise control, a minor engine oil leak and some scratches or dents. This is one approach, but I prefer to have a car where everything works. So, if you’re not planning to do any maintenance work yourself, I think you should pick a younger vehicle.

 

Figure out the running costs before buying a car

I hope that you now have a better idea of what to expect maintenance-wise after buying a second-hand car. Keeping the car running strong is one thing. You also need to consider the insurance cost, the fuel cost and the road tax.

Definitely get an insurance quote before buying a car. This is very important for young drivers. In some cases, the insurance can be more expensive than the car itself, so make sure you know what to expect.

The road tax in the UK is based on CO2 emissions. You can see how much you will need to pay here.

 

Buying a used car from a dealer or privately?

You probably already know that cars sold by dealers are more expensive than those sold privately. However, what you may find surprising is how big the difference can be.

When buying a used car from a dealer, you will typically pay 5-25% more than when buying privately. The older the car, the bigger the difference.

In some ways, however, the higher cost when buying from a dealer is justified.

Dealers have to inspect the car, which already costs money. Then they have to take care of any major problems if they find any.

In the UK, cars sold by car dealers need to be roadworthy. It’s not a high standard by any means, but the car must be safe to drive with no obvious problems. Also, car dealerships often fix big dents and scratches that would otherwise lower the value of the car.

The car is then cleaned and put for sale. Advertising the car also costs money. Then they have to pay the salesperson that hovers around you while you are trying to inspect the car. If a used car from the dealership comes with a warranty, it is also added to the car price.

After incurring all these costs, the used car dealer needs to make money when selling the car. It’s their business model after all. They may not make money on all cars, but they must do on the majority of them to stay in business.

 

Buying from a dealer

Here’s a list of advantages and disadvantages of buying a used car from a dealer:

• The car must be roadworthy and without major problems (a legal requirement in the UK)

• You have some legal protection (more will be explained below)

• The car usually comes with a warranty

• Used car prices are typically 5-25% higher than when buying privately

• You can part-exchange your vehicle (not the most cost-effective option)

• Financing is available (often not the most cost-effective option)

If you’d like to save a bit of money when buying a car on finance, visit your bank and see what interest rates they can offer. When buying a used car, dealer financing often cannot match the interest rates offered by the banks (if you have a good credit score).

By taking a loan directly from the bank, you are cutting out the middleman, which in this case is the used car dealer. Hence, you should be able to get lower interest rates.

 

Your legal rights

In the UK, when you buy a used car from a dealer, you are protected by the consumer rights. You can return the vehicle within 30 days if you find that it’s faulty.

After 30 days, but before 6 months have passed, you can still get a refund for repairs of a defect that you think must have been present when you bought the car. It’s up to the seller to prove that the vehicle wasn’t faulty on the day of the purchase.

In the US, the consumer rights are not as strong as European ones, unfortunately. The laws that protect car buyers are called “Lemon Laws“. They apply to used cars in some states.

Read more about your legal rights after buying a second-hand vehicle here:

• UK Consumer Rights

• US Lemon Laws

 

Buying from a private party

Here’s a list of advantages and disadvantages of buying a used car privately:

• The car prices can be a lot lower than at the dealership and there is more room for negotiation

• You can ask the owner about the vehicle’s history (maintenance, problems, previous repairs etc.)

• Without the ability to inspect a used car, buying a car privately is like playing roulette as there isn’t much legal protection

• There is no warranty unless you buy your own

• Financing and the option to part-exchange are not available

So, you can get a better deal when buying privately but it’s a riskier purchase.

 

Where to find used cars to buy

The best place to find used cars is online. I don’t recommend visiting any places in the real world without first establishing specifically which cars model you are interested in.

If you go to a used cars dealer and ask for advice, they will shove down your throat whatever they currently have in their lot.

So, make your self a cup of tea and find a car model that you like online. When you search online, you can narrow down to a few specific models you are interested in, and see what is available in your area. You can also compare prices.

Some of the most popular websites to find used cars are:

• eBay  (UK) – I’m sure you are familiar with eBay. Both private car owners and companies advertise their used cars on eBay. There is a review system so you can check seller’s feedback.

• AutoTrader (UK) – AutoTrader is geared towards selling vehicles and has more features than eBay – price comparisons, car background checks and vehicle specs. It has a seller review system as well.

• CarGurus (USA) – Great site for people looking to buy a used car in the US. You can read car reviews as well.

• Cars.com (USA) – Another good site for people in the US.  It has a good seller rating system, which is very important.

• AutoTempest (USA) – This portal displays car listings from multiple websites, including eBay, cars.com and AutoTrader.

Please note that it’s important to use sites that have a seller rating system. This gives the sellers an incentive to avoid selling bad cars.

Always check seller’s reviews!

 

How to talk to used car sellers: Psychology 101

In a perfect world, car sellers would always be honest and petrol would cost the same as water.

In the real world, you need to be ready to deal with less than 100% honest people. Truly dishonest sellers are a small minority, but there are a few things that you should be prepared for.

Here’s something important to know:

People don’t like to lie.

However, not telling the whole story is a different thing…

What I mean by this is that used car sellers are often comfortable not telling you things that may be wrong with the car they are selling, but they usually won’t lie when you ask them directly. This behaviour is called lying by omission and it’s something that you should be aware of.

My advice is to ask a lot of specific questions about the car you are looking to buy. This way, you are likely to learn a lot more about the condition of the vehicle.

Also, write down the things the seller tells you and verify the information later yourself. For example, if the seller tells you that the tyres were replaced a year ago, check their production date. If the timing belt was supposedly replaced, you want to see a receipt or at least some proof that it was.

You get the picture, right?

By verifying the provided information yourself, you can asses if the seller is trustworthy. Better safe than sorry.

I find that people are generally honest, but only if you ignore the cases of lying by omission. If you take it into account, they are all pathological liars…

Joking aside, remember to ask specific questions and check everything on the car yourself (where possible).

I will give you some specific questions to ask when you meet the seller in part 3 of this guide: the pre-purchase inspection.

 

Questions to ask on the phone

For now, here are some more general questions that you should ask on the phone before going to see a car you’d like to buy:

• Can you describe the condition of the car?

• Are there any problems? / What are the problems? [write the problems down]

• How complete is the service history?

• Is it your own car, or do you sell cars for a living? [don’t ask if it’s obvious]

• Is the price negotiable?

• Is it okay if I get the car inspected independently? [the only correct answer is “yes”. If the seller doesn’t agree right away, don’t waste your time]

• Does the car come with a warranty? [question for a dealer]

• Are there any fees on top of the car price [question for a dealer]

Additional questions to ask when talking to a private seller:

• How long have you owned the car? [anything above 2 years is okay, less is a potential red flag unless a good explanation is given]

• Why are you selling it?

• How often did you change the oil? [this is to check how well the car was maintained – you don’t want to hear “I don’t remember” or “3 years ago”]

• What engine oil do you use? [this is to check if the owner took an interest in the car]

• Did you service the car at the dealership or at an independent garage?

• Do you have any receipts for maintenance work or repairs? [write down what you hear, you will check the receipts later]

 

Check the vehicle history online

In the UK, you can use the online HPI Check to obtain a report about the car’s history.

You can purchase a report before meeting with the seller or after the test drive. Nevertheless, you shouldn’t buy a used car without first doing an HPI Check if you’re in the UK. It’s inexpensive and it will give you a lot of useful information.

The HPI report includes the following checks:

• outstanding finance (very important)

• insurance write-off (avoid such cars unless the price is very low and you know what you are doing)

• records in the stolen vehicle database

• VIN check

• mileage records (a good way to spot clocked vehicles)

• MOT status & history

• number of previous owners

• vehicle valuation (not always available)

This list isn’t exhaustive, but these are the main things that you can get out of an HPI report.

The US equivalent of the British HPI Check is the Carfax report. It is more expensive than the HPI Check but still well worth it. A cheaper alternative is the AutoCheck report. It is less comprehensive though.

You will need the vehicle identification number (VIN) to obtain a vehicle history report in the US, so don’t forget to ask the seller for the VIN on the phone.

 

Don’t be a tyre kicker

Before we finish, I’d like to ask you not to waste the seller’s time.

In my opinion, when you go to see a car for sale, you should have the intention to buy it as long as it matches the car description and has no defects. Please do your research at home, read the car listing and check all the attached photos. Then decide if the car looks promising, and make the phone call to learn more about it.

It’s perfectly fine to change your mind after the phone conversation. You might hear something that you don’t like. The car may have defects that weren’t mentioned in the description online, or the price is not negotiable.

However, if you agree to a meeting, you should go with the intention to buy the car as long as it matches your expectations and you find no problems with the car. I think that honesty should be rewarded, not punished by wasting the seller’s time.

At the same time, never feel pressured to buy a car if it doesn’t match what was advertised. Don’t feel bad about saying ‘”no” when you don’t like something about the car. In such situations, it’s the car seller that should feel bad for misleading the potential buyers.

Also, car dealers might try to pressure you for a quick sale. Again, it’s your right to say “no” or completely ignore them until you are done checking the car, and you are happy with its condition. Take your time with the pre-purchase car inspection. Only when you are happy with the vehicle, you should make the decision to buy the car or not.

You can tell the salespeople to take a hike if they become too pushy.

What I’m trying to say is that you should not waste people’s time by test driving cars without an intention to buy them in the first place. However, deciding not to buy a car because of its poor condition is a completely different thing!

 

Press here for part 3: Pre-purchase Inspection

 

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